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The business world is full of famous examples of organizations
sticking with certain assumptions far too long.
IBM stayed with a mainframe focus in the 1980s while servers and
PCs took over. Blockbuster clung onto retail outlets even though
DVD movies could now be ordered online and mailed. And Nokia
ignored the emergence of smartphones and remained completely
focused on standard cell phones until it was too late.

Sometimes when a business is confronted by considerable
challenges, a leader needs
to question underpining assumptions and try out a new strategy.

During the America’s Cup yacht competition last fall in San
Francisco Bay, the U.S. team was confounded by New Zealand's
initial lead. Both teams relied on exotic technology
enabling their boats to attain speeds of 50 miles. New
Zealand was tacking with an angle of almost 50 degrees. (When
there's wind, the only way to move forward is to sail at an angle
to the oncoming gusts, going to the right then switching to the
left in a process called tacking.)
Someone on the U.S. team finally questioned the Americans'
assumptions that using a 42 degree angle was best. In the fourth
race, members of the U.S. team experimented with a new strategy,
trying out a 55 degree angle. The U.S. team then won eight races in
a row and defeated New Zealand 9 to 8. It was one of the most
dramatic comebacks in the history of sports.
Related: How to Improve Your
Critical Thinking Skills and Make Better Business
Decisions

There's a powerful lesson for leaders here: Namely, beware of
assumptions. Here is what you should do regularly:

1. Isolate the key assumptions being
made. It took Lou Gerstner, the former CEO of IBM,
to do the extensive customer interviews needed to make a new way
forward clear: IBM salespeople had assumed their job was to sell
hardware instead of solving customers’ IT-related business
problems.

2. Constantly probe the basis for your assumptions and
question if your thinking is valid. Blockbuster did
not do this and when offered in 2000 a chance to buy for $50
million the fast-growing Netflix (which rented DVD movies by
mail), it rejected the offer and continued building thousands of
additional stores.

3. Continually test new approaches. As possible
new directions emerge, experiment appropriately so as to learn
about their potential. Even when R&D staffers begged Nokia’s
management to obtain customer-experience results for a smartphone
with iPhone-lilke features they had developed in 2004 (three
years before the iPhone was introduced), they were turned down.
This closed-mindedness eventually led to Nokia’s demise.